Treasury

Convergence Programme

lord agnew of oulton: Article 121 of the Treaty on the Functioning of the European Union (TFEU) requires the UK to send an annual convergence programme to the European Commission reporting upon its fiscal situation and policies. Submitting the annual convergence programme remains a legal requirement during the Transition Period, as set out in the Withdrawal Agreement.Once approved by both Houses of Parliament, the UK’s convergence programme will be sent to the European Commission. This deadline was set in accordance with the European semester timetable for both convergence and national reform programmes.Section 5 of the European Communities (Amendment) Act 1993 requires that the content of the convergence programme must be drawn from an assessment of the UK’s economic and budgetary position which has been presented to Parliament by the Government for its approval. This assessment is based on the Spring Budget 2020 report and the most recent Office for Budget Responsibility’s “Economic and Fiscal Outlook” and it is this content, not the convergence programme itself, which requires the approval of the House for the purposes of the Act.Article 121, along with Article 126 of the TFEU, is the legal basis for the Stability and Growth Pact, which is the co-ordination mechanism for EU fiscal policies and requires Member States, and the United Kingdom during the Transition Period, to avoid excessive government deficits. Although the UK participates in the Stability and Growth Pact, by virtue of its protocol to the Treaty opting out of the euro, it is only required to "endeavour to avoid" excessive deficits. Unlike the euro area States, the UK is not subject to sanctions at any stage of the European semester process.A Motion to Approve has been passed in the House of Commons and subject to the progress of parliamentary business, a debate will take place in the House of Lords, in order for both Houses to approve this assessment before the convergence programme is sent to the European Commission. To inform the debate I will deposit a copy of a document in the House of Lords Library early next week.